Angry Pakistan to impose tax on NATO military supplies

ISLAMABAD — Pakistan is planning to tax supplies for U.S.-led coalition troops that are shipped through its territory to land-locked Afghanistan, officials revealed, in retaliation for the recent deaths of its soldiers in a "friendly fire" incident on the border.

Under the proposal being worked up inside the government, which is set to become policy, a transit tax or fee will be imposed on every shipping container sent through Pakistan, according to senior military and civilian officials

The move will add tens or perhaps hundreds of millions of dollars a year to the cost of the conflict, which is now a decade old. It follows the deaths of 24 Pakistani soldiers at a checkpoint that was shelled by a U.S. helicopter, the latest incident this year to roil the relationship between the anti-terrorism allies.

It's thought that the government will levy around $1,500 per shipping container sent through Pakistan, along with separate charges for each fuel tanker en route to Afghanistan. That's equivalent to adding one-third to the costs of transporting a container through Pakistan.

The international coalition in Afghanistan has benefited from the free transit of goods through Pakistan for nearly a decade, under agreements forged with Islamabad soon after the overthrow of the Taliban regime. Although the coalition purposely has reduced its logistical dependence on Pakistan over the last few years, around a third of its supplies are still trucked through the country, which is the cheapest route to Afghanistan.

The free transit of U.S. and NATO military supplies was allowed under two agreements signed in 2002, when dictator Gen. Pervez Musharraf was ruling the country.

"Under the agreement, NATO got to use our transport infrastructure for no cost, but what we got in return, we don't know. It is high time to revisit the agreement," said a senior Pakistani official, who spoke only on the condition of anonymity as the new policy hasn't been announced. "The agreement appears to be one-sided."

The official added that the details of how the tax would work are still being formulated.

The U.S. has provided more than $21 billion in civilian and military aid to Pakistan since 2001.

Prime Minister Yousuf Raza Gilani said Wednesday that tougher rules of engagement were being worked out with NATO, "with the aim of providing more respect to our sovereignty."

Islamabad suspended the movement of coalition supplies altogether after the soldiers' deaths in November. The tax on NATO supplies would be the most hard-hitting of the punitive measures Islamabad imposed, but it would at least provide Pakistan with a face-saving way of reopening the route. After the deaths at the border, Pakistan also terminated the American use of an air base, Shamsi, and boycotted an international conference on Afghanistan.

Anger within the Pakistani military is intense over the deaths, which it believes were a deliberate attempt to see how far the country could be pushed. An outraged public is demanding an end to all cooperation with the U.S.-led coalition.

It's estimated that some 4,000 containers a month carry supplies to NATO troops from all three routes, meaning that around 1,300 of them would pass through Pakistan. In addition, some 1,000 fuel tankers go from Pakistan to Afghanistan each month.

The supplies to NATO's 150,000 troops are shipped to Karachi and then trucked across the country, entering Afghanistan either in its south, through the Chaman border crossing, or via the Khyber Pass to eastern Afghanistan. A much longer and more expensive supply route that enters northern Afghanistan has been developed through Europe and central Asia, while the rest of the goods are flown in, the most costly option.

Four years ago, around 80 percent of the supplies went through Pakistan. NATO says that one-third goes via Pakistan now, while the northern route and the air corridor also make up a third each.

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Pakistan complains that the heavy trucks have ruined its roads, while it charges nothing for the transit facility. However, the containers are trucked by Pakistani companies, employing some 40,000 people in the industry.

The trucks, which don't have any security escort, are frequently the target of militants and robbers. A further problem for the industry is the bureaucracy at the Karachi port, where the paperwork for each container takes a week to clear, and sometimes much longer.

Nadeem Khan, the chief executive of Raaziq International, one of the major Pakistani companies that are involved in carrying NATO supplies, said the imposition of a transit fee would benefit the trade if it were accompanied by streamlined clearance at the Karachi port and protection for the trucks.

"If Pakistan provides speed of passage and security too, then everyone would be a winner," Khan said.

A spokesman for the military coalition — known as the International Security Assistance Force — U.S. Col. Gary Kolb, said negotiations with the Pakistani government over the supplies issue were ongoing.

"It would be inappropriate of ISAF to comment on those discussions at this time," Kolb said.